I am wrong, the company will be allowed to stay in business.
August 27, 2008
Ohio company owner gets 25 years in fraud case
By THE ASSOCIATED PRESS
Filed at 1:18 p.m. ET
CINCINNATI (AP) — A business owner convicted of defrauding customers seeking male sexual enhancement products and a variety of herbal supplements was sentenced Wednesday to 25 years in prison.
Steve Warshak, 42, founder of Berkeley Premium Nutraceuticals, also was ordered to pay $93,000 in fines. He was convicted in February on 93 counts of conspiracy, fraud and money laundering.
Federal prosecutors accused the company of bilking customers out of $100 million through a series of deceptive ads, manipulated credit card transactions and refusal to accept returns or cancel orders.
U.S. District Judge S. Arthur Spiegel ordered the company, along with other defendants, to forfeit more than $500 million. He said it was impossible to calculate exactly how much money was lost by customers, so he accepted a figure based on how much Warshak and the company took in.
Berkeley distributes various products alleged to boost energy, manage weight, reduce memory loss and aid sleep. The company’s main product, Enzyte, which promises sexual enhancement, has ads featuring ”Smiling Bob,” a happy man with an exaggerated smile.
”This is a case about greed,” Spiegel said as he reviewed the case. ”Steven Warshak preyed on perceived sexual inadequacies of customers.”
Spiegel said one aspect of the fraud relied on the reluctance of customers to come forward, which would mean admitting they ordered the sexual enhancement pills.
”I don’t see any evidence of remorse or concern for anyone but himself,” Spiegel said.
Allowed to make a statement, Warshak said that was not true.
”I do feel deep remorse and would like to apologize to any customer who ever had a bad experience with my company,” he said. ”I apologize to all the great people, the employees of Berkeley — they’ve given their heart and soul. I let them down.”
Spiegel said the company, which likely will be hit with the majority of the forfeiture, will be allowed to remain in business.
Spiegel denied Warshak’s request to remain free on bond pending appeal, but gave him 30 days to wrap up personal business and report to prison.
Warshak’s mother, Harriet Warshak, was sentenced to two years in prison. She was convicted of conspiracy and other charges.
Spiegel allowed her to remain free pending appeal and acknowledged that she is 75, has cancer and likely will never be incarcerated because of the time it takes appeals to work through the courts.
”It probably will take some years before that is accomplished,” Spiegel said.
She had pleaded with the judge not to send her to prison.
”I have grandchildren,” she said. ”The time I have left, I’d like to spend with them. I don’t think it’s fair to take me away from them.”
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